Inxuba Yethemba: Eskom Threatens PAJA Process Over R943M Debt

• Inxuba Yethemba Local Municipality's overdue electricity debt to Eskom reached R943 million by June 2026, increasing by over R143 million in ten months.
• The municipality consistently failed to honor payment agreements, including defaulting on the National Treasury Municipal Debt Relief Programme and an April 2025 cooperation agreement.
• Between April and September, IYLM paid only R2 million against R111.1 million billed, with one monthly payment as low as R2,780.02.
• Eskom implemented a bulk prepayment arrangement in May 2026 and has warned it may initiate a Promotion of Administrative Justice Act (PAJA) process against the municipality.
• The Democratic Alliance is demanding accountability, a full reconciliation of electricity revenue, and an explanation for the municipality's non-compliance and failure to commit to a Distribution Agency Agreement.

This potential application of the Promotion of Administrative Justice Act municipality-wide could set a precedent for Eskom municipal debt enforcement South Africa, indicating a more aggressive stance by the state-owned entity to recover outstanding funds and ensure financial discipline among its municipal clients.

The Inxuba Yethemba Local Municipality (IYLM) in the Eastern Cape faces a severe and escalating electricity debt crisis with Eskom, with its overdue balance reaching approximately R943 million by the end of June. This alarming figure represents a further increase of over R143 million in just ten months, following a reported debt of R799.8 million by August 2025. These details emerged from a response by Cooperative Governance and Traditional Affairs MEC Zolile Williams to a question posed by Democratic Alliance (DA) MPL Heinrich Müller in the Eastern Cape Legislature.

Documents accompanying MEC Williams's response, including an Eskom presentation dated October 10, 2025, reveal a consistent pattern of non-payment. Over six billing cycles between April and September, IYLM was invoiced for R111.1 million but remitted only R2 million to Eskom, amounting to less than two percent of the total billed electricity. In one particularly stark instance, the municipality's total repayment for a single month was a mere R2,780.02, against a monthly bill of nearly R12.8 million. This chronic underpayment has persisted despite the municipality having entered into multiple payment arrangements.

This dire financial situation indicates a complete disregard for established agreements designed to manage the municipality's spiralling Eskom debt. IYLM not only defaulted on the National Treasury Municipal Debt Relief Programme but also failed to adhere to an additional debt relief agreement. Specifically, a cooperation agreement from April 2025 mandated that the municipality pay its current Eskom account in full and contribute at least R500,000 monthly towards its arrears, obligations it demonstrably failed to meet.

In response to the persistent IYLM Eskom debt default, Eskom has taken increasingly stringent measures, including a stark warning that it may be compelled to initiate a Promotion of Administrative Justice Act (PAJA) process against the municipality. This potential Inxuba Yethemba Eskom PAJA process signals a significant escalation in Eskom's efforts to enforce debt recovery against defaulting local authorities across South Africa. The utility confirmed to the National Council of Provinces (NCOP) in August 2026 that IYLM's proposed monthly payments were insufficient to cover its ongoing electricity consumption.

Prior to this legal threat, Eskom had already implemented a bulk prepayment arrangement in May 2026. This measure restricts the municipality's electricity supply to only the amount it has paid for in advance, directly impacting service delivery. Furthermore, Eskom highlighted that IYLM has not committed to implementing a Distribution Agency Agreement, a mechanism often used to improve revenue collection and management for electricity services. The municipality's continued non-compliance with the National Treasury Municipal Debt Relief Programme and other agreements underscores the challenges in managing Eastern Cape municipal electricity debt.

This potential application of the Promotion of Administrative Justice Act municipality-wide could set a precedent for Eskom municipal debt enforcement South Africa, indicating a more aggressive stance by the state-owned entity to recover outstanding funds and ensure financial discipline among its municipal clients.

The ongoing financial mismanagement by the Inxuba Yethemba Local Municipality carries significant implications for its residents and for municipal governance across the country. The Democratic Alliance has voiced strong concerns, with DA MPL Heinrich Müller requesting clarity on the municipality's compliance with the debt-relief programme and an explanation for its failure to commit to a Distribution Agency Agreement. The party plans to submit a formal question to the Council, demanding the latest Eskom balance and a full reconciliation of electricity revenue collected versus payments made.

Residents who diligently pay for their electricity are entitled to understand how their revenue is being managed and why the municipality has repeatedly failed to honour its commitments. The DA argues that IYLM cannot begin to reduce its substantial historic debt while simultaneously accumulating new debt. They advocate for a DA-led administration to ring-fence electricity revenue, prioritize the current Eskom account, implement a credible repayment plan, and provide monthly reports to both the Council and residents on financial inflows and outflows related to electricity.

This situation underscores the critical need for financial discipline and accountability within local government to stabilize municipalities and protect residents from further electricity insecurity. The potential Inxuba Yethemba Eskom PAJA process, if pursued, will be a closely watched development, offering insights into the legal remedies available to state-owned entities against non-compliant local authorities and the broader landscape of municipal financial governance in South Africa.

This development signals Eskom's increasing willingness to use the Promotion of Administrative Justice Act (PAJA) to enforce debt recovery against defaulting municipalities, setting a potential precedent for similar actions across South Africa. Lawyers should monitor the progress of this PAJA process to understand its implications for municipal financial governance, service delivery obligations, and the legal remedies available to state-owned entities against non-compliant local authorities.

Source: Original reporting via DA